IACP 12th September 2012 Taxation Round-Up Irish Association for - - PDF document

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IACP 12th September 2012 Taxation Round-Up Irish Association for - - PDF document

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IACP 12th September 2012 Taxation Round-Up Irish Association for Counselling and Psychotherapy Presented By: Colm Owens Anne Brady McQuillans DFK www.annebrady.ie Colm Owens, Audit Manager Anne Brady McQuillans DFK Oversee the firms

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IACP 12th September 2012 www.annebrady.ie 1

Taxation Round-Up Irish Association for Counselling and Psychotherapy Presented By: Colm Owens Anne Brady McQuillans DFK

www.annebrady.ie

Colm Owens, Audit Manager Anne Brady McQuillans DFK Oversee the firms audit and accounts department Provides invaluable advice and assistance with all aspects of audit and accountancy matters including tax issues for all sizes of businesses and organisations Contact Details cowens@annebrady.ie 01 478 6600

www.annebrady.ie

Topics for discussion

  • Deciding Legal Entity under which to trade
  • Registration, operation and compliance of the

following taxes:

  • Income Tax
  • VAT
  • PAYE
  • Corporation Tax
  • Relevant Contract Tax

www.annebrady.ie

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IACP 12th September 2012 www.annebrady.ie 2

Deciding the Legal Entity

  • Will the business make sufficient profits to justify

the additional expense of running a company?

  • Is a company structure required for a grant

application or is there a potential investor?

  • Are you willing to deal with the paperwork

associated with the business in a timely manner or will you outsource/delegate this to someone else?

  • Is limited liability important in your industry sector?

www.annebrady.ie

Deciding the Legal Entity

  • Is there a good marketing reason to trade through

a company rather than as a sole trader? Do you want to protect the business name by registering a company?

  • Do you accept that the company’s accounts will be

filed on public record at the CRO (although these will be abridged for small companies)?

  • Practical and legal matters should be taken into

account when setting up a company (on which you should seek professional advice.)

www.annebrady.ie

Sole Trader

  • Business decisions are the result of the owners

abilities

  • Extension of the individual who owns it
  • Business owned/operated by one individual
  • Not a separate legal entity under law
  • Profit/loss combined with other income for

Income Tax purposes

  • Optional to register business name, Registrar
  • f Business Names www.cro.ie

www.annebrady.ie

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IACP 12th September 2012 www.annebrady.ie 3

Advantage of Sole Trader

  • Easiest form of business to operate
  • Business decisions are the result of the owners

abilities

  • Relatively cheap compared to other types of

business

  • Losses from the business can be offset against
  • ther income
  • If business fails it is relatively easy to close

down

www.annebrady.ie

Disadvantages of Sole Trader

  • Possible higher tax liabilities as taxed on the

actual profits of the business and not just on the funds you withdraw

  • Unlimited liability for all the debts of the

business

  • Reduced options in relation to pension

entitlements, the use of civil service mileage rates and other issues.

  • Less flexibility in transferring ownership

www.annebrady.ie

Partnerships

  • Two or more individuals run the business
  • Each has the responsibility for liabilities
  • Legal entity recognised under law
  • Partnership required to file an Income Tax

return, Form 1

  • Register business name
  • Partnerships can be messy - vital that a

partnership agreement is set up detailing profit share etc.

www.annebrady.ie

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IACP 12th September 2012 www.annebrady.ie 4

Limited Company

  • Separate legal entity
  • Legal rights of an individual
  • Responsible for its own debts
  • Legal protection afforded to owners
  • Approval from CRO to use proposed name
  • Adopt/file a Memorandum and Articles of Association
  • Must file Corporation Tax returns and pay tax on

profits

www.annebrady.ie

Limited Company

  • Must file tax returns
  • Pays Corporation Tax on its profits
  • Before incorporating seek advice from an

accountant

  • Advantages and disadvantages

www.annebrady.ie

Limited Company - Advantages

  • Low tax rate on profits, 12.5%
  • Improved options for raising finance
  • Easier sale or transfer of an interest in the

business

  • Greater pension benefits for directors can be

secured

  • Motor expenses - mileage allowances &

subsistence claims

  • Tax incentive schemes for new start up

companies

www.annebrady.ie

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IACP 12th September 2012 www.annebrady.ie 5

Limited Company - Disadvantages

  • Formation costs - Initial set up cost
  • Accountancy costs are higher as you must file

accounts and an annual return

  • Financial and other information has to be filed
  • n public records
  • Lenders and key suppliers often seek personal

guarantees from directors which tend to reduce significantly the value of limited liability

  • Potentially subject to double taxation
  • Not your money to withdraw

www.annebrady.ie

Registering for Taxes

  • You should advise the tax office when you

start in business. You can do this by filling in

  • ne of the following forms:
  • TR1 Form (appendix A1)

Sole traders, Trusts & Partnerships – Income Tax – PAYE – VAT – RCT

www.annebrady.ie

Registering for Taxes

  • TR2 Form (Appendix B1)

Registration of Companies – Corporation Tax – PAYE – VAT – RCT

  • You can request a "New Business Visit" from

your local Revenue office, for assistance, to ensure compliance.

www.annebrady.ie

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Irish Association for Counselling and Psychotherapy

INCOME TAX

www.annebrady.ie

Income Tax – Self-Assessment

  • Income Tax is chargeable on all income arising in

the state to an individual, partnerships and unincorporated bodies.

  • Most common form of Income Tax is PAYE which is

deducted by employers.

  • When a person is self employed, Income Tax

registration (TR1 form) is required, as their income is not taxed at source.

www.annebrady.ie

Examples of Untaxed Income:

  • Profits from rents
  • Investment income
  • Foreign income and foreign pensions
  • Maintenance payments to separated persons
  • Fees
  • Profit arising on exercising various Share

Options/Share Incentive

www.annebrady.ie

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IACP 12th September 2012 www.annebrady.ie 7

Tax Treatment

  • Contract for services i.e. Self-employed
  • Individual is responsible for taxes etc.
  • Payments for such services can generally be

made gross.

  • The individual is entitled to various tax

deductions for expenses.

www.annebrady.ie

Tax Treatment

  • Contract of services i.e. Employed
  • Payments for such services are generally

subject to PAYE/PRSI

  • Such an individual is entitled to limited tax

deductions, example: Architects. They are entitled to flat rate expenses of €127 pa.

www.annebrady.ie

Allowable Expenses

  • Test: Wholly and Exclusively for the

purposes of the trade.

  • Electricity – Could include a portion of home

ESB bill if working from home

  • Heating – Could include a portion of home gas

bill if working from home

  • Insurance - Business related
  • Rent
  • Research e.g. books, magazines

www.annebrady.ie

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IACP 12th September 2012 www.annebrady.ie 8

Allowable Expenses - Continued

  • Serviced offices
  • Stationery
  • Subscriptions for the purposes of the trade
  • Telephone, Broadband
  • Transport – motor expenses restricted. (Add

back for personal use of car)

  • Wages and salaries – if employing another

person

www.annebrady.ie

Pre Trading Expenses

  • Deduction for pre-trading expenses
  • Within three years prior to commencement

which would normally would be allowable

  • Examples of pre-trading expenses are:

– Accountancy fees and Advertising costs, – Costs of feasibility studies, – Costs of preparing business plans, – Rent paid for the premises from which the business operates.

  • Expense can only be offset against trade income

from that business but can be carried forward against future business profits.

www.annebrady.ie

Non-Allowable Expenses

  • Business entertainment expenditure, i.e. the

provision of accommodation, food, drink or any other form of hospitality

  • Any private or domestic expenditure, e.g. your
  • wn wages, food, clothing (except protective

clothing), Income Tax, etc., Drawings must be added back.

  • Donations to eligible charities allowed if
  • ver €250 p/a – claim on tax return.

www.annebrady.ie

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IACP 12th September 2012 www.annebrady.ie 9

Items of a Capital Nature

  • Capital allowances, on capital items, are allowable

as a deduction against taxable profits, at 12.5%. Examples are as follows:

  • Computers
  • Software
  • Fixtures & Fittings
  • Motor Vehicles etc.

www.annebrady.ie

Tax Cut-off Point 2011 & 2012 €

  • Single Person

32,800

  • Married Couple

(Single Income) 41,800

  • Married Couple

(Dual Income) 65,600

  • Standard Rate @ 20%
  • Balance is taxable @ 41%
  • Applies to all income, not just salary

www.annebrady.ie

Tax Credits 2011 & 2012 €

  • Single Credit

1,650

  • PAYE Credit

1,650

  • Home Carers Allowance

810

  • Dependant Relative Credit

70

  • Third Level Educational Fees:

Relief at 20% (first €2,000 disregarded for full time)

  • Service Charges €80 (2011 Only)

www.annebrady.ie

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PRSI

  • The Class S rates for 2011 & 2012 are:
  • Self-Employed : 4% (Min contribution €253)
  • PRSI is a stand alone deduction
  • The Universal Social Charge (USC) replaced

both the Health Contribution Levy and the Income Levy effective from 1 January 2011.

www.annebrady.ie

Universal Social Charge (USC)

  • USC is chargeable on “Relevant Emoluments” and

“Relevant Income”.

  • Relevant Emoluments - Income, Benefits etc.
  • Excludes – termination and social welfare payments
  • Relevant Income – Gross Income
  • Excludes – income liable to DIRT, CU dividends, life

policy returns, maintenance arrangements

  • There is no exemption from the USC for holders of full

medical cards but a maximum rate of 4% applies

  • Occupational pension payments are liable to the USC

www.annebrady.ie

Universal Social Charge – USC Rates

Aggregate Income USC (individual <70 with no Medical card USC (Individual <70 with full medical card USC (individual >70 in tax year Less than €4,004 Exempt Exempt Exempt First €10,036 2% 2% 2% Next €5,980 4% 4% 4% up to limit which relevant income exceeds €100k 7% 4% 4% excess relevant income >100k 10% 4% 7%

www.annebrady.ie

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Accounts & Tax for Self Employed

  • Separate bank account
  • Retain all receipts
  • Tax is charged on the annual profit
  • Income less allowable expenses.

www.annebrady.ie

Pay & File Dates

  • Must file your tax return by, 31st October/16th

November (extension if you pay & file online)

  • therwise surcharge may apply.
  • Preliminary Tax:
  • 1. 100% of the final tax payable for the previous tax

year or

  • 2. 90% of the final tax payable for the current tax year
  • r
  • 3. 105% of the final tax payable for the pre-preceding

year.

www.annebrady.ie

Pay & File Dates

  • Balance of tax payable for 2011 is due on the

31st October 2012

  • First year, not obliged to pay tax (can have an

impact in 2nd year when two amounts of tax are payable – tax for prior year and preliminary tax for current year.)

www.annebrady.ie

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IACP 12th September 2012 www.annebrady.ie 12

Examples - On-going Business

  • In the year 2012 you must:
  • Pay preliminary tax for the tax year 2011 on or

before 31 October 2011,

  • File your tax return for the tax year 2011 after

1 January 2012 but no later than 31 October 2012,

  • Pay any balance of tax due for the tax year

2011 on or before 31 October 2012.

www.annebrady.ie

Example - New Business

  • You started in business on 1 July 2011 during

the tax year 2011:

  • Payment and Return Filing dates will be as

follows:

  • Preliminary Tax for 2011 due on or before 31

October 2011,

  • Balance of tax due for 2011 must be paid on or

before 31 October 2012,

  • Preliminary Tax for 2012 due on or before 31

October 2012,

  • Tax returns for 2011 to be submitted on or

before 31 October 2012.

www.annebrady.ie

Surcharge on Late Filing:

  • If you fail to submit your tax return by the due

date, you will face a surcharge on your final tax bill for the year. The surcharge is:

  • 5% of the tax liability, if the return is made

within 2 months of the due date.

  • 10% of the tax liability, if the return is made 2

months after the due date.

  • No surcharge is applicable to new businesses, if

the Year 1 return is made by the return filing date for Year 2.

  • Directors are surcharged on the actual tax paid

even if no liability at the filing date.

www.annebrady.ie

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Offset of Trade Losses If you make a loss on your business activities you can either:

  • Offset the loss against other taxable income (if

you have any)

  • r
  • Carry the loss forward to be offset against

future profits of your business.

  • You must indicate on your tax return how you

want the loss to be used.

www.annebrady.ie

Irish Association for Counselling and Psychotherapy

VALUE ADDED TAX

www.annebrady.ie

VAT – Value Added Tax

  • VAT is a tax on consumer spending,

administered entirely by traders who collect VAT from their customers and who hand it

  • ver (less the tax they pay to their suppliers)

to the Collector General.

  • Most complex of taxes you will encounter

while doing business in Ireland

www.annebrady.ie

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IACP 12th September 2012 www.annebrady.ie 14

VAT - Compulsory Registration

  • Turnover Thresholds are:

– €75,000 for person supplying goods – €37,500 for persons supplying services – €37,500 for persons making distant sales into Ireland – €41,000 for persons making intra community acq – An non established person, supplying taxable goods or services in the state, must register irrespective of the level of turnover – If a person receives certain services from abroad they will need to register for VAT

www.annebrady.ie

Voluntary registration

  • When is it beneficial to voluntarily

register? – If most of the company’s sales are to other businesses – If you are incurring VATable expenses – Consider: Cost of time Vs Input credit

www.annebrady.ie

What are the current VAT rates?

  • Standard Rate:

21% (23% effective 1 January 2012) – Most goods and services (except those listed below)

  • Specific Goods and Services:

13.5%: Certain fuels, services, photographic supplies etc. 9%: Tourism & Hospitality Sector

  • Reduced Rate:

4.8%: Sale of livestock, greyhounds, hire of horses

  • Zero rated:

0%: Children’s clothes, books, certain foods etc.

  • Exempt: Financial, medical, education etc.

www.annebrady.ie

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New 9% VAT Rate

  • Second reduced VAT rate of 9% - 1 Jul 2011 to 31 Dec 2013
  • The supplies of goods and services at the new 9% rate

include: – Catering and restaurant supplies, including vending machines and take-away food (exc alcohol & soft drinks sold as part of the meal) – Hotel lettings, including guesthouses, caravan parks, camping sites etc – Cinemas, theatres, certain musical performances, museums, art gallery exhibitions – Taking part in sporting activities incl green fees charged for golf &subs charged by non-member-owned golf clubs – Hairdressing services

www.annebrady.ie

New 9% VAT Rate

Supplies of goods and services remaining at the 13.5% rate

  • Bakery products, excluding bread
  • Residential property / non-residential property
  • Building services related to residential property/ non-

residential property, including installation

  • Cleaning of residential property/ routine cleaning of non-

residential property

  • Waste acceptance and disposal services
  • Short-term hiring of cars, boats, caravans, mobile homes,

tents or trailer tents

  • Repair and maintenance of cars, vehicles, vessels & aircraft
  • Health studio services
  • Certain works of art, antiques and literary manuscripts

www.annebrady.ie

Reclaim of VAT

  • Most goods and services attract VAT
  • If the goods/services a company supplies are

subject to VAT, they can reclaim all VAT on purchases relating to the business.

  • If the goods/services supplied are VAT exempt

(I.E. Financial, medical, educational activities) the company may not reclaim any VAT on purchases.

  • If a company supplies a mix of products/services

(exempt and not exempt), they are entitled to reclaim a portion of the VAT on purchases – ratio

  • f sales of exempt products/services to non-

exempt

www.annebrady.ie

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Accounting for VAT

  • VAT becomes payable as soon as a sales invoice is

sent (even though money may not be received yet)

  • VAT becomes deductible as soon as a purchase

invoice is received (even though money may not be paid yet).

  • Most Companies/Sole traders account for VAT in this

way, however, they can also now account for VAT under the 'cash receipts basis'

  • This has the advantage that, they do not need to

account for the output VAT until they have been paid.

www.annebrady.ie

Cash Receipts Basis

  • A Company/Sole trader may opt for a cash

receipts basis of accounting for VAT if:

  • 90% of turnover consists of supplies of goods

and services to unregistered persons or

  • Annual gross turnover is not likely to exceed

€1,000,000.

  • Transactions between connected parties are

excluded from this method of accounting for VAT

  • NB – Efficient way to mange your cash flow

www.annebrady.ie

What records must be kept:

  • Sales invoices which clearly show:
  • Business name, address and VAT registration number
  • Name and address of the person to whom goods/services

were supplied

  • Date of issue of the invoice
  • Date on which the goods/services were supplied
  • Description of the goods / services supplied
  • Quantity of goods supplied
  • Price excluding VAT
  • Rate and amount of VAT applied for each supply of

goods or services.

www.annebrady.ie

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What records must be kept:

  • Purchase invoices (i.e. Bills) must show

suppliers' VAT registration number.

  • This will help to record all purchase invoices in

a Purchases Book

  • Cash Book and Cheque Payments Book

www.annebrady.ie

VAT VAT Reclaims – The Seven Deadly Sins! 1. Cars 2. Petrol 3. Food 4. Drink 5. Accommodation 6. Entertainment Expenses 7. Personal goods or services

www.annebrady.ie

Payment & Filing Dates

  • VAT

– 19th day following the VAT period – bi monthly – 23rd day following the VAT period if you Pay and File online – Return of trading details (ROTD)-Annual return – Unpaid VAT interest .0322% per day

www.annebrady.ie

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VAT – Useful Hints

  • Keep VAT records for a period of 6 years,

(Unless the Inspector of Taxes advises

  • therwise)
  • VAT guide is a very helpful reference book and

the Revenue Commissioners publish an extensive list of factsheets.

  • The Importance of Getting it Right
  • Mistakes lead to fines
  • Get professional advice

www.annebrady.ie

Irish Association for Counselling and Psychotherapy

PAYE/PRSI

www.annebrady.ie

PAYE

  • The Pay As You Earn (PAYE) system is a method
  • f tax deduction.
  • The employer calculates and deducts any

income tax due on wages/salary etc. paid to employees.

  • In addition, employers are obliged to calculate

and deduct any liability to Pay Related Social Insurance (PRSI) and Universal Social Charge (USC).

www.annebrady.ie

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Registration for PAYE

  • You must register for PAYE/PRSI if you

pay: – €8.00 per week (€36.00 a month) or more, to an employee who has only one employment – €2.00 per week (€9.00 a month) or more, to an employee who has more than one employment.

www.annebrady.ie

Tax Basis

  • Cumulative Basis
  • Emergency Basis
  • Week 1/Month 1 Basis

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Universal Social Charge (USC)

  • USC is chargeable on “Relevant Emoluments” and

“Relevant Income”.

  • “Relevant Emoluments “ - Income, Benefits etc.
  • Excludes – Termination and social welfare payments
  • “Relevant Income” – Gross Income
  • Excludes – Income liable to DIRT, CU dividends, life

policy returns, maintenance arrangements

  • There is no exemption from the USC full medical card
  • holders. Instead a maximum rate of 4% applies
  • Occupational pension payments are liable to the USC

www.annebrady.ie

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Universal Social Charge – USC Rates

Aggregate Income USC (individual <70 with no Medical card USC (Individual <70 with full medical card USC (individual >70 in tax year Less than €4,004 Exempt Exempt Exempt First €10,036 2% 2% 2% Next €5,980 4% 4% 4% up to limit which relevant income exceeds €100k 7% 4% 4% excess relevant income >100k 10% 4% 7%

www.annebrady.ie

PRSI

  • Class A – All Employees and Directors with

less than 50% shareholding

  • Class S – Directors with 50% or more

shareholding PRSI Contribution Rates and User Guide SW 14

www.annebrady.ie

PRSI – Employee Employee (PRSI Class A1) 2011 € Allowance (per week) €127 Rate of contribution 4% Earnings ceiling for contribution N/A

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IACP 12th September 2012 www.annebrady.ie 21

PRSI – Employer

Employer (PRSI Class A1) 2011 2012 Lower PRSI Rate 8.5% 8.5% Reduced PRSI Rate Effective 01/07/11 4.25% 4.25% Ceiling for lower rate (earnings per week) 356 356 Higher PRSI Rate 10.75% 10.75%

www.annebrady.ie

Benefit-In-Kind

  • Benefits-in-kind received from your employer

are taxable, if the total remuneration received is €1,905 or more in a tax year. Examples:

  • Private use of a company car
  • Free or subsidised accommodation
  • Preferential loans – 15%
  • Medical insurance premiums
  • Club subscriptions
  • Car parking facilities - €200
  • Cycle to work scheme – Tax exempt

www.annebrady.ie

Benefit-In-Kind

  • Where an employee receiving such benefits is

a director of the company concerned, the benefits are taxable regardless of the level of remuneration.

  • The liability to tax also applies in respect of

benefits provided by an employer for a member or members of an employee's family

  • r household.

www.annebrady.ie

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Redundancy

  • Increasingly common
  • Statutory Redundancy:

– 2 years of service – 104 weeks of Class A contributions – Payment – 2 weeks pay for every year of service, plus 1 week pay. (capped at €600 per week) – 15% refund available to Employer from Social Insurance Fund at, Dept. of Enterprise, Trade & Employment – Payment is exempt from PAYE, PRSI & USC

www.annebrady.ie

Important Forms

  • P30 – Monthly, Quarterly, Bi Annual return
  • P35 – Yearly return of PAYE/PRSI deducted

from employees

  • P45 – Cert given to employee on leaving

employment, which should be passed to new employer

  • P60 – Summary of yearly earnings
  • Tax deduction cards/ P2C for employees

www.annebrady.ie

Payment & Filing Dates

  • PAYE

– 14th day following PAYE period – Extension to the 23rd if filed online – Alternative Quarterly returns, if annual PAYE/PRSI is less than €28,000 per annum – P35 Annual Return - 15th February – Unpaid PAYE interest .0322% per day

www.annebrady.ie

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Irish Association for Counselling and Psychotherapy

CORPORATION TAX

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Corporation Tax

  • Corporation Tax is charged on all profits made

by companies

  • Companies resident in Ireland and non

resident companies who trade in Ireland are liable to Corporation Tax

www.annebrady.ie

How is a Company Taxed?

  • This tax is charged on the company’s profits

which include both income and chargeable gains.

  • A company’s income for tax purposes is

calculated in accordance with Income Tax rules.

  • Chargeable gains are calculated in accordance

with Capital Gains Tax rules.

www.annebrady.ie

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IACP 12th September 2012 www.annebrady.ie 24

Rate of Corporation Tax

Income Type Rate Trading Income 12.5% Foreign Income/ Rental/ Investment Income 25% Chargeable/ Capital Gains 30% Dealing in Development Lands Various

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Criteria to obtain 12.5% CT Rate

  • 12.5% rate is not an automatic entitlement
  • An Irish resident company which does not have

business in Ireland is taxed at 25%

  • Main criteria are as follows:

– Engage Irish based employees – Company’s activities adds value in Ireland – Company has a premises from which is operates NB – Ability to prove presence is key

www.annebrady.ie

Company Obligations

  • Register for Corporation Tax – TR2 FORM (see

appendix B1)

  • Compute and pay preliminary tax liability
  • File CT1 and 46G return within nine months of

the end of accounting period

  • Pay any balance of tax due when filing

Corporation Tax return

www.annebrady.ie

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Prelim Payment - Small Companies

  • A small company is a company with a Corporation Tax

liability of less than €200,000 in the preceding year.

  • Payment Options:

– 90% of company’s current year liability – 100% of previous year’s liability In Both cases payment is due by 21st of the 11th month in the accounting period.

  • New or start up companies, with a Corporation Tax

liability of less than €200,000, in their first accounting period will not be required to pay Preliminary Corporation Tax. The liability is paid when the return is filed.

www.annebrady.ie

Preliminary Tax : Payment dates for Large Companies

  • Companies with a CT liability of more than €200,000

in their previous accounting period are obliged to pay preliminary Corporation Tax, in two instalments: – 1st Instalment: by the 21st of the 6th month in the accounting period (must be 50% of preceding year or 45% of current year profits) – 2nd Instalment: by the 21st of the 11th month in the accounting period (must bring total prelim paid to 90% of current year liability) – Final 10%: Due 9 months after year end.

www.annebrady.ie

Consequences of filing late returns

  • Surcharge will be imposed as follows:

– Surcharge of 5% of tax due (max €12,695) where return is filed within 2 months of the due date – Surcharge of 10% of tax due (max €63,485) where return in filed after 2 months of the due date

  • Restriction of losses/allowances in the year if return is

filed late

www.annebrady.ie

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Company Capital Gains Tax

  • Capital Gains Tax made by a company from

the sale of chargeable assets, with the exception of development land, are included in a company’s profits for Corporation Tax purposes

  • Gains by companies from disposals of

development land are chargeable to Capital Gains Tax and are not included in profits chargeable to Corporation Tax

  • Capital Gains Tax is chargeable at 30%

www.annebrady.ie

Close Company Issues

  • Should a company have 5 or fewer shareholders it

will be deemed to be a close company.

  • This has many tax implications:

– Interest in excess of specified rate paid to directors will be treated as a distribution – not deductible and tax charged on director – Loans/advances to directors/associates must be made under deduction of tax – Surcharge of 20% is imposed on undistributed after-tax investment income of close company

www.annebrady.ie

Taxation of directors & shareholders

  • If you set up a company, the company will be
  • bliged to register for and operate PAYE/PRSI
  • n your salary as a director.
  • Directors will be taxed according to the

Income Tax code (Similar basis to the self- employed)

  • Shareholders will have to pay income tax on

any dividends received from the company.

  • Shareholders can avail of certain tax credits

which they can offset against this tax.

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IACP 12th September 2012 www.annebrady.ie 27

Start-up exemption

  • New start-up companies which commence

trading in 2009 and 2010 are exempt from Corporation Tax and Capital Gains Tax in each

  • f the first 3 years, provided that their tax

liability in the year does not exceed €40,000

  • Extended to 2011 for start up companies
  • Ceiling on relief linked to PRSI paid in relevant

accounting period – max 5k per employee

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Start up exemption

  • The company must commence a “new trade”

which cannot be previously carried on by another individual or company

  • Trade will not include professions, providing

professional services, exercising an employment or the provision of services to a business entity carrying on a profession or exercising an employment.

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Useful Websites

www.ros.ie www.citizensinformation.ie www.welfare.ie www.revenue.ie www.annebrady.ie

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IACP 12th September 2012 www.annebrady.ie 28

Questions…??? Thank You…!!! Taxation Round-Up Irish Association for Counselling and Psychotherapy Presented By: Colm Owens Anne Brady McQuillans DFK

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